Adidas Warns That Russia Conflict Could Impact 2022 Business as it Halts Sales in the Region
Adidas is one of many retailers expecting to see a hit from sales to due impacts from Russia’s conflict with Ukraine.
The German sportswear retailer on Wednesday shared an updated outlook for fiscal year 2022 that takes into account a risk of up to €250 million, or about $275 million at current exchange, from impacted operations in Russia. This represents about half of Adidas’ revenues in the region and an impact of about one percentage point of overall growth for Adidas.
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Like Nike, Puma, Under Armour and more companies, Adidas recently suspended all retail and e-commerce sales in Russia, which partly accounts for the impacts to business in the region. Adidas has also closed offices and stores in Ukraine.
“Unfortunately, we release our 2021 results in unsettling times,” said Adidas CEO Kasper Rorsted in a press release. “Our thoughts and prayers are with the Ukrainian people, our teams on the ground and everyone affected by the war. We strongly condemn any form of violence and stand in solidarity with all those calling for peace.”
Even with risk factors from Russia, Adidas still expects currency-neutral sales to increase between 11% and 13%, continuing on a path towards recovery.
“When it comes to Russia, we fully support and strictly follow all sanctions imposed by the German and European government,” said Adidas CFO Harm Ohlmeyer.
Earlier this month, Adidas suspended its partnership with the Russian Football Union (RFU), the governing body that oversees football in Russia. Adidas also donated $1 million to Ukrainian refugees and charities.
In 2021, net sales grew 16% on a currency neutral basis to €21.23 billion, or $23.3 billion at current exchange, falling short of predictions between 17 and 18 percent growth. Sales revenues are still behind pre-pandemic levels, but up from 2020. In Q4, sales fell 3% in currency neutral terms.
In 2021, Adidas was faced with ongoing consumer boycotts of Western-made goods in China, pandemic-related lockdowns and factory closures, supply-chain issues and inflation. According to executives, these issues amounted to a €1.5 billion euros loss in revenue growth in 2021, including a €400 million euros loss in Q4.